Bangladesh Mobile Money Empowered by bKash

In July 2014, Bangladesh mobile money was my podcast interview topic with Kamal Quadir, CEO of bKash in Bangladesh, one of several devoted to financial inclusion in developing countries.

Launched in mid-2011, bKash enables mobile money transfers on all four country telcos. 20+ other banks are licensed to offer similar services over SMS. Of the country’s 160 million people, 98% have inexpensive mobile phones, but only 28% use Bangladesh mobile money. So, as Kamal remarked in the podcast, there’s lots of room for growth.

bKash is the fastest growing mobile financial services company worldwide and ranks second of all MFS providers. The country’s mobile money use represents 5.6% of GDP, compared to 55% of Kenya’s M-PESA. bKash and Dutch-Banglia Bank own 95% of the MFS business in Bangladesh.

Most experts assume the reason for less than a third of the country’s population choosing MFS is due to lack of literacy and dependence on over 100,000 retail agents spread across the country. Read this interesting article in the Dhaka Tribune for more insights.

bKash Grows Bangladesh Mobile Money Services

According to Quadir, bKash has 16 million registered customers. Average usage, however, varies over each 90 days from 4.2M to 5.1M people, according to the GSMA. The registered customer discrepancy is due to lack of monthly active transactions, multiple accounts opened by the same people and SIM cards changed on an average every eight months.

bKash customers use their mobile phones to exchange money with each other, top off their phone minutes and, if desired, leave balances which earn interest. Cash-in (deposits) and cash-out (withdrawals) are handled by the agents spread across Bangladesh. bKash only charges transaction fees on cash-outs.

Quadir told me in the podcast interview that early adopters to the service were generally ages 16-24 and women textile workers, although bKash found women were sometimes reluctant to give out their telephone numbers to agents.

Watch the video below to see how the Bangladesh Mobile Money system works:

Bangladesh Central Bank Proposes MFS Changes

Kamal told me last year in the podcast interview the main reason for bKash’s growth was due to clear rules how mobile money exchange services work from the beginning. In countries without specific regulations, MFS organizations have faltered.

In late August 2015, bankers, non-banking companies like bKash, and mobile operators, met to discuss Bangladesh Central Bank’s proposal that would create a consortium of MFS players. Amid much disagreement and some inflammatory comments among the participants, the BCB officials said it’s only proposing an MFS industry where one player owns no more than 15% of total market share. No one at the meeting liked the idea.

As Kamal Quadir commented, this comes at a time when 28 banks are authorized for MFS, but less than 20 have entered the market. (They’re all losing money, by the way.) Both telcos, key players, and Mastercard asked why to change a system that’s working, when India, President Obama, and MFS customers express satisfaction with the current system. The Central Bank representatives said the proposal was only preliminary.

Beyond Bangladesh Mobile Money: Rising Up the Pyramid

Meanwhile, bKash continues expanding its services. Working with Universal Medical College and Hospital Limited, patients may pay their medical bills through bKash, an idea, I think, worth trying in the U.S. to lower the rising cost of healthcare through fewer payers.

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